Constitutional Amendment has been constituted in congruence with the idea of new public management. Under this concept the major role the state play is of withdrawing itself from directly influencing the market activities and let demand and supply correct the course of market. One of the features of this concept is that the government breaks down the huge monolithic government beaurcracies, which refers to heavy decentralisation of responsibilities and authorities. According to my understanding the enactment of the 74th Constitutional Amendment Act is very much influenced by this characteristic of new public management. Before the enactment of 74th Constitutional Amendment Act the role of urban local bodies was merely of implementation of activities undertaken by state and national government.

Constitutional status has been granted to the urban local bodies under the 74th Constitutional Amendment Act, under which a three tier structure of the urban local bodies has been envisaged. Formation of Municipal Corporation for larger area with higher populations the example of this can be Ahmedabad Municipal Corporation, and creation of municipal councils for smaller areas which includes towns like Upleta in Gujarat, and creation of village panchayats for villages that are in transitions to become towns.

Under this amendment the governing members of the municipal corporation are being elected by the people through an election in a similar way in which the members of the lok sabha are elected, the election is conducted, managed and regulated by the state election commission. This indicates that the democracy has established deep roots in the political system of the country.